Cannabis stocks: Canopy Growth and Aurora Cannabis rally ahead of Georgia runoff elections

Canopy Growth and Aurora Cannabis stocks have been rallying since Monday just as voters prepared for the runoff elections in Georgia. A win for either the Democratic or Republican party will have extensive consequences for investment in cannabis stocks and the marijuana industry.

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The following covers key details surrounding why Aurora Cannabis (NYSE: ACB) and Canopy Growth (NASDAQ: CGC) stocks are rallying just as the Georgia runoff elections are holding. It also covers how a swing in either political direction is likely to affect cannabis stocks and the industry.

Why are Canopy Growth and Aurora Cannabis stocks rallying?

Just like the build-up to the U.S. Presidential elections, cannabis stocks have been boosted by the potential outcome of the Senate runoff race in Georgia. Similarly, Canopy Growth and Aurora Cannabis have benefited from the momentum that both events have triggered. Why are these weed stocks rallying again? Is it purely sentimental or is there more to it? Here are a few reasons.

Investors’ confidence is rising

Investors’ confidence in the marijuana industry and cannabis stocks is generally rising. With weed stocks like GrowGeneration (NASDAQ: GRWG), Innovative Industrial Properties (NYSE: IIPR), and Green Thumb Industries (OTC: GTBIF) all doubling their value in 2020, it is clear that investor interest in the industry is certainly rising in line with the rapidly growing market.

The marijuana businesses are performing well

Despite their struggles in 2020, Canopy Growth and Aurora Cannabis still have some positives to show. Aurora Cannabis for instance has made massive changes to reduce its cost of operations in recent times. While it is yet to fully benefit from these actions, they will ultimately boost investors’ confidence in their business. Aurora Cannabis is also one of the most subscribed marijuana stocks available. While this may be as a result of its low stock price at the moment, the way its business is run has also influenced this.

Reignited hope for marijuana federalization

The U.S. House of Representatives passed the Marijuana Opportunity Reinvestment and Expungement (MORE) Act last year. Since then, hopes have been renewed that the legalization of marijuana at the Federal level is on the brink. Weed stocks like Aurora Cannabis and Canopy Growth stand to benefit a great deal from such a development. It, therefore, makes sense that events like the runoff elections will boost investment momentum in the direction of these stocks.

How will the Georgia runoff elections affect cannabis stocks?

Since the build-up to the US general elections, it’s been common knowledge that a win for the Democratic party will mean well for the marijuana industry. However, despite having a majority in the House of Representatives, the Democratic party remains a minority in the Senate with 46 seats. If the party wins the two seats in the runoff elections in Georgia, it will effectively form a caucus with the independent candidates who own two seats, thereby empowering the vice president with a deciding vote in the event of a split decision.

One of the biggest impacts the runoff elections in Georgia will have on cannabis stocks is for the Senate to pass the MORE Act. The MORE Act was recently passed by the House of Representatives. A Senate controlled by the Democratic party would ensure that the MORE Act goes through eventually. This will also pave the way for a series of pro-cannabis legislation across the country. Interestingly, one of the lead sponsors of the MORE Act is Vice President-Elect Kamala Harris. It is facts like this that boost investor sentiment towards cannabis stocks and the marijuana industry.

Closing thoughts

As at the time of writing, the Associated Press has already called one of the two seats in the Senate runoff election. It was called in favor of the Democratic party’s Raphael Warnock. The party also leads in the last seat as the final set of votes are counted. This development may ultimately be a giant step in the direction towards cannabis legalization in the U.S. at the federal level. 

While this may not happen immediately, it is certainly enough to boost investors’ confidence and give the industry further credibility. Here are the top cannabis stocks that Wall Street expects to become profitable in 2021.